Why Residential

The Housing Crisis

The residential asset / product category is the only one that supports the case for a highly visible and stable returns argument over a sustained period of time – especially in prime Southern California Coastal markets.

The economic strength of the region and the general appeal of climate and geography – coupled with decades of limited availability of land for development, neighborhood resistance, and strict local regulations – have created an immense housing shortage within our markets.

Demand Side Economic

On the demand side, the psychological scars of 2008 have healed, buyer credit has improved, interest rates remain low, millennials are aging and starting families finally, and the transfer of wealth from the baby boomer generation down to the Millenials (the largest demographic group) has significantly bolstered the demand for residential product in Los Angeles.

Changing Importance of Residential

Alternatively, looking at the commercial sector, the notion of going into an “office” is changing with untethered work and nomadic work in shared or “live/work” spaces becoming the norm, reducing the demand for office space dramatically. Similarly, the online shopping and instant home delivery revolution is significantly impacting retailers as well, as the demand for big box retail disappears, and storefronts on street retail shrink. The metrics of the residential sector are strengthening, the metrics of the commercial sector weakening. We believe we are on the right side of this arbitrage.